While the motivating concern of the perspective described in this section is
that of global equity, the literature included here has also sought to incorporate
concerns of efficiency and sustainability. The main mechanism through which
this has been accomplished is by using equity considerations to argue for the
protection of the prospects of sustainable development in developing countries.
Such an agenda is equivalent to a non-co-ordinated pursuit of sustainability
in each country, as well as the formulation of policies that promote economic
growth and resource efficiency.

This is analogous to the discussed in Section 1.2, in
which it was shown that the costbenefit perspective enables the assessment
and comparison of alternative policy options from an efficiency standpoint.
Analogously, the progression from global equity to sustainable development enables
the comparison of policy options that emanate from concerns about global equity.
This framework has evolved precisely to enable the assessment of the synergies
and trade-offs involved in the pursuit of multiple goalsenvironmental
conservation, social equity, economic growth, and poverty eradication (Box
1.2). These analyses touch upon many of the themes relevant to an assessment
of the broad range of policy options described abovetime horizon, uncertainty,
and welfare.

Box 1.2. Sustainable Development

The term sustainable development was popularized in academic
and policy circles by the Brundtland Report (WCED, 1987), although its
distinctive antecedents predate the report (especially IUCN, WWF, and
UNEP, 1980). The Brundtland Commission defines it as development
that meets the needs of the present without compromising the ability of
future generations to meet their own needs (WCED, 1987, p. 8). However,
although the ubiquity of references to this definition suggests a degree
of scholarly consensus, this is not the case. There is considerable disagreement
on conceptual grounds and, perhaps most significantly, on its operationalization
(see Lélé, 1991). Nevertheless, most scholars and practitioners
accept a concern for economic prosperity (development), ecological integrity
(sustainability), and social justice (equity) as the three pillars of
sustainable development (Buitenkamp et al., 1992; Opschoor, 1992; Munasinghe,
1993, 2000; Banuri et al., 1994; Munasinghe and Shearer, 1995; Elkington,
1997; Carley and Spapens, 1998; Sachs et al., 1998; Sachs, 1999).

Sustainable development is an integrating concept (Lélé,
1991; Perrings, 1991; Dietz et al., 1992; Munasinghe, 2000) that has emerged
gradually (Rayner and Malone, 1998a , 2000; Costanza, 1999; Munasinghe,
2000; Pichs-Madruga, 1999). Initially, the environmental, economic, and
social domains were treated independently, and sustainability viewed as
their sum or union. More recently, with the shift in emphasis towards
practical and operational aspects, the literature has begun to look at
synergies and trade-offs between the three goals.

Sustainable development is one of a series of innovative conceptsfollowing
such antecedents as human development, equitable development, or appropriate
developmentthat seek to broaden the scope of development theory from its
narrow focus on economic growth.17
However, this evolution has not led to a radical transformation in the operational
dimensions of development planning. The focus still continues to be the stock
of capitalwhich in many ways serves as the proxy for welfare or as the
index of the real or permanent income of a society (see
Johnson, 1964). As such, much development policy concentrates on measures that
stimulate investment and expand the stock of capital. Each innovation has served
mainly to expand the definition of the capital stock.

Sustainable development, being the most recent in the series of conceptual
advances, subsumes the earlier ones, and rather than meaning simply development
plus natural resource conservation, includes human development, poverty
eradication, and social equity as well. Accordingly, it expands the definition
of the capital stock to include human capital (skills), natural capital (natural
resources and biodiversity), and, most recently, social capital.18
In principle therefore, sustainable development is equivalent to investment
in this composite stock of capital. However, there are differences of approach
rooted in the persistent controversies in development thinking. Some authors
focus on investments in all relevant forms of capital, while others focus on
the capacity to make such investments. Similarly, the degree of substitution
that is possible between kinds of capital -- for example, between natural and
human capital -- is a subject of disagreement among researchers. (see Box
1.3).19

Box 1.3. Approaches to Understanding Sustainability

Economists distinguish between four main components of the resource base:
natural capital (natural resource assets), reproducible capital (durable
structures or equipment produced by human beings), human capital (the
productive potential of human beings), and social capital (norms and institutions
that influence the interactions among humans). These are called capital
because they are durable assets capable of generating flows of goods and
services. In this construction, development is sustainable if some aggregate
index across all forms of capital is non-decreasing.

Strong Sustainability. The strong sustainability approach of the
so-called London school (Pearce, 1993) holds that different types of capital
are not necessarily substitutable, so that sustainability requires the
maintenance of a fixed (or minimum) stock of each component of natural
capital. Under this notion, any development path that leads to an overall
diminishment in the stocks of natural capital (or to a decline below the
minimum) fails to be sustainable even if other forms of capital increase.

Weak Sustainability: The weak sustainability approach asserts
that the different forms of capital can substitute for one another to
some degree. The substitutability of different types of capital implies
that the preservation of an aggregate level of capital, rather than the
preservation of natural capital in particular, is crucial. The weak sustainability
approach is consistent with the idea that some loss of climate capital
could be consistent with sustainability if increases in other forms of
capital could compensate for the loss.

It might appear from the above that sustainable development entails a trade-off
between investment in physical capital, social capital, and natural capital,
and therefore between economic growth, income distribution, and environmental
conservation. However, some branches of development theory have ceased to view
these as trade-offs. In particular, the goal of the research on sustainable
developmentespecially conservation strategies and action plansis
to show that under appropriate institutional and social conditions there is
a synergy rather than conflict between different goals (IUCN, WWF, and UNEP,
1980). Even earlier, development analysts had begun to question the supposed
trade-off between economic growth and income distribution (World Bank, 2000;
see also Kuznets, 1955; Hicks, 1979; Chenery, 1980; Fields, 1980).

Table 1.1: Per capita income and carbon emissions
in various regions

Reference case, 1990 to 2020 (MtC)

Region/Country

History

Projections

Average annual

change (%)

1990

1996

2000

2010

2020

1996 to 2020

North America

1550

1687

1833

2079

2314

1.3

USA

1346

1463

1585

1790

1975

1.3

Canada

126

140

151

162

182

1.1

Western Europe

936

904

947

1021

1114

0.9

Industrialized Asia

364

389

377

435

479

0.9

Japan

274

291

273

322

358

0.9

Australasia

90

99

103

113

122

0.9

Total Developed

2850

2980

3157

3535

3907

1.1

Former Soviet Union (FSU)

991

613

583

666

746

0.8

Eastern Europe (EE)

299

228

243

270

277

0.8

Total EE/FSU

1290

842

827

935

1024

0.8

Developing Asia

1065

1474

1659

2426

3377

3.5

China

620

805

930

1391

2031

3.9

India

153

230

273

386

494

3.2

Middle East

229

283

323

434

555

2.8

Africa

178

198

214

270

325

2.1

Central and South America

174

206

251

418

629

4.8

Total Developing

1646

2161

2447

3547

4886

3.5

Total World

5786

5983

6430

8018

9817

2.1

These debates stem from the earliest days of development thinking, in which
a distinction was made between the balanced growth advocated by
some writers (Rosenstein-Rodan, 1943; Nurkse, 1958), and the strategy of unbalanced
growth advanced initially by Albert Hirschman (1958). Hirschman argued
that growth is a disequilibrium process, which occurs through the efforts of
economic agents to overcome bottlenecks that emerge during normal economic activity.
Therefore, policy should not be restricted merely to the mobilization of financial
transfers and transfer of technology, but should focus on the larger goal of
creating the capacity for mobilizing and allocating such resources,20
in effect to create conditions in which economic agents can most effectively
respond to bottlenecks.

It is fair to say that the development profession has increasingly invoked
themes from the latter approach. The emphasis has shifted from promoting growth
towards promoting the capacity for growth. Development policy is concerned increasingly
with conditions that stimulate investmenttrade liberalization, structural
adjustment, skill development, governance, institutional development, and market
accessrather than the investment itself. This is partly because the fashion
has changed from public to private investment, and partly because a large body
of research shows that, while the scarcity of financial resources can inhibit
the growth process, inflows do not necessarily promote it (Bauer and Yamey,
1982). For example, a recent review of cross-country experience (World Bank,
1998) discovered that the net impact of foreign resource inflows depends critically
on ancillary factorsthe nature of domestic policies, the fiscal stance,
the institutions of governance, and the openness to international trade flows.
Successful foreign aid led to US$2 of additional private sector
investment for every dollar of aid, while in failed cases foreign
aid was associated with a net decline in private investment.

Similar shifts have occurred in other areas of development theory and practice.
The operationalization of sustainable human development, for example, is increasingly
argued to consist not of the simultaneous pursuit of several independent goals,
but of investments in social capital to enable the other goals to be pursued
through normal market or regulatory mechanisms (Banuri et al., 1994). Poverty
eradication programmes focus increasingly on institutional development rather
than the creation of physical or social infrastructures. They concentrate on
the fact that poor and vulnerable groups generally lack formal organizational
structures and recognition as well as the capacity to respond to market opportunities.21

While many consider equity to be a good thing in and of itself, this alone
may not be reason enough to include it within the context of climate change
mitigation. The literature on equity and climate change tends to argue rather
that the pursuit of equity will help generate support for mitigation efforts;
and that by enabling the pursuit of sustainable development within individual
countries, it will lead to more effective mitigation (Lipietz, 1995; Rowlands,
1995; Runnals, 1997; Shue, 1995; Jamieson, 1996, 2000; Byrne, et al., 1998;
Parikh and Parikh, 1998; Tolba, 1998; Agarwal et al., 1999). Given that developing
countries have a large suite of pressing social and economic concerns besides
emissions control (Najam, 1995; Runnals, 1995; Tolba, 1998), they tend to be
wary of mitigation policies lest they undermine other policy goals. Support
for sustainable development, besides its own merits, can generate support for
climate policy as well. While global climate policy seeks to push the Annex
I countries towards emissions contraction, global sustainable development policy
offers the opportunity to nudge the developing countries towards a potentially
convergent trajectory.

Of course, the question is not simply of nudging and pushing countries towards
an ultimately equitable path, but to arrive at a global stabilization that is
both equitable and sustainable in the long run. Reaction to the Kyoto targets
(Malakoff, 1997) suggests that this would require much more than just slight
pushing and nudging. A growing literature suggests that this process would be
helped by a the longer term focus on sustainability and the alternative development
pathways that could lead to it. This is the subject of the next section.